Pricing Yourself Out of the Market

In response to my previous articles on historic rate data in California and New York and my use of inflation to extrapolate forward what those rates should be today, a frequent-enough comment was that reporters would price themselves out of the market or somehow hurt the field if their rates were higher. I’m not blind to the realities of the market. I understand there are challenges to running a business, and a point where what we could ask for would be “too high.” I’m working on a bigger post for that too. But for now, let’s just dive into understanding how the game is played, at least in New York, and juxtapose it to the rest of the country.

Often the original is a deflated price to lock in work. If it’s Joe’s deposition, and Joe is your client, you might charge him 6, 7, or 8 dollars if he’s not a regular client. Who cares about Joe’s firm? He only has a deposition once a year. Might as well squeeze as much out of Joe as possible. But if Joe owns a huge firm and they’re involved into hundreds of suits and generating thousands of depositions, you might offer Joe $3.50, $2.00, whatever it is to lock in that work, even if you lose money on the original or don’t charge anything at all for the original. Why? Copies.

Copies are incredibly valuable. As I’ve written before, there’s no regulation in New York on them. Companies have, at least for the last decade, been offering reporters somewhere between $0.00 and $0.50 on copies. This gives the reporter the impression that they’re worthless. This gives companies an awful lot of wiggle room.

If your reporter is only taking 25 cents a copy, you can send a copy purchaser a bill for $4.00 a page. If they don’t complain and just pay it, you’ve just made a whole lot of money. If they complain, they just turned into a sales pitch target. “Oh, our agency has the highest quality standards and we do charge for that. But our reporter said you were such a joy to work with, so we’ve been authorized to cut your bill in half!” Doesn’t matter if it’s true. All that matters is they’ve just sold the person on the other end a positive feeling. “Wow! My bill is half! They like me, they really like me!” The reporter doesn’t know or care, they made their 25 cents. The agency doesn’t really care because printing copies is practically costless. Even on an inefficient home printer, the cost is somewhere in the realm of 25 cents a page, and pennies per page when you get into industrial printers.

So quite frankly, when an agency tells you that they can’t pay more on an original because that’s what they charge the attorney, they may or may not be lying. But it’s on you to understand that that does not mean that they’re doing poorly. That doesn’t mean they can’t afford to pay you better. It’s a tactic. They’re selling you a feeling too. “Wow. They’re paying me the whole O + 2. I feel greedy.” Anything that’ll get you to do the work for less without question and without competing with them directly is more money in their pocket. That’s the bottom line.

Reporters constantly berate each other too. “Why should you expect more? Have you improved your skills any?” But now it’s coming out that a brand-new startup company outside NY is ready to pay its brand new digital reporters $140 for the first two hours — which sounds a lot to me like a $140 minimum. They mention all these cities that they’re paying this in, San Francisco, Los Angeles, Seattle. They say this is the average. Yet I keep hearing about how inexpensive digital reporting is. All the stenographers everywhere else make so much more that a $40 an hour cost to the agency is cheap? You know what all those cities have in common with New York City? They’re some of the most expensive to live in. They’re some of the most expensive to rent office space in.

We are not some anomaly where we just work for less here. You really think any of the so-called big boxes are looking at their profit and loss statements and saying “well, it’s New York, so we just work for less out there.” No. The money is coming in. It might not be coming from your original, but you can be damn sure that with a main office and 1 to 4 satellites, they’d have no problem raising your rates somewhere. But the issue is in our education. From a typical stenographic education, there’s very little business training. There’s very little market training. If you’re a kid, and this is your first real career, you’re not born with business sense. You can get suckered into a $60 bust fee (NY) because you just don’t know any better. People who had real-world experience made more starting out. If I was pulling $40k a year starting out, my best friend, a decade older, was pulling $100k. And, mind you, by all my calculations, even he was underpaid.

That’s the issue in New York, from my perspective. We lack education. We lack an appropriate model where kids out of school are shown the ropes and mentored. If you have a gaggle of agencies all saying that you expect too much or you’re only worth X, then you come to believe you’re only worth X. Yet here you are, seeing with your own eyes, that people with far less education, training, and experience in deposition reporting are being offered comparatively high rates. Remember, these folks, talented as they are, aren’t necessarily preparing the transcript. So let me ask you, reporters, is your hourly appearance fee $40? Forget real-time, rough, daily, expedite. Just for showing up, are you collecting $40 an hour?

What’s left? Talk to each other. Maybe consider pooling some money and starting a business. Make it very clear that they pay us or they compete with us. But don’t ever let me hear again that they can’t afford to raise rates. It’s a game. And the sooner you quit playing by their rules, the sooner you’ll win it. Rule one of any corporate culture I’ve ever been a part of? Don’t rock the boat. I’ve shown you that we’re better value than this digital craze. By all means, rock the boat and show them we can build better businesses too.